In the last seven years, Ben Mirfakhraei has seen how cheap Chinese imports have driven down wholesale prices for Cyrus Hosiery MFG Inc.’s bras, underwear and socks.
So when the Bush administration said it would limit Chinese imports of bras, other undergarments and fabric made with synthetic filament threads, Mirfakhraei, general manager of Compton-based Cyrus, welcomed the relief.
“We are happy. If there was no quota from China, then the price would just come down. Now that there are quotas, the price will level out,” he said.
The administration’s move limited import growth in these categories to 7.5 percent annually. It comes after a decision to impose quotas on Chinese sock imports.
Despite the quotas, Mirfakhraei said that the competition has pushed down prices for Cyrus socks to $4 per dozen from $6 a few years ago.
Three years ago, Cyrus started manufacturing in Pakistan, where labor prices are lower than in the United States. Cyrus owns the factory in Pakistan, but also subcontracts to India and Bangladesh to make its hosiery goods. “You got to be flexible to be able to survive in this business,” said Mirfakhraei.
Some succumb to the competition. Charles Perry, president of Vernon-based David Charles Inc., is closing shop in November after 34 years in business. The company makes knit components for sweaters.
Perry said Bush’s action does little to stop the flood of imports. “It just delays the inevitable,” he said. “What they were doing was a little saber rattling.”
Constrained by the start-up costs of going offshore, David Charles had kept manufacturing local. But costs skyrocketed and prices fell. “I look at this very pragmatically. I am going to sell everything and say goodbye,” Perry said. “It is going to be more and more difficult to find a diverse array of suppliers.”
Blue Buzz
Blue Holdings Inc.’s campaign to protect its stylized back pocket designs is going directly to the competition.
After the Commerce-based company got a restraining order in federal court, U.S. marshals seized 70 jeans from a booth operated by Vigoss Jeans Inc. at Magic, the fashion industry trade show in Las Vegas.
Blue Holdings had filed a complaint in the U.S. District Court in Las Vegas against Vigoss and jean maker A.V. Denim Inc., alleging that the companies copied designs used to distinguish Antik, a Blue Holdings’ denim brand.
The action follows a lawsuit alleging copyright infringement filed by Blue Holdings last month against Turn On Products Inc. and Alloy Inc. in U.S. District Court in downtown Los Angeles. At the time of that filing, the company indicated that it would pursue similar lawsuits.
Blue Holdings, whose premium jeans have been hot sellers, has been on a tear, recently inking a deal to sell its expensive Yanuk brand jeans in Japan.
Under terms of the agreement, Caitac International Inc. will be the exclusive distributor of Yanuk jeans in Japan. Caitac is required to generate minimum net sales of $12 million from Sept. 1, 2005 through April 30, 2007.
Caitac handles the Japanese distribution for other local denim brands, including Paige Premium Denim, owned by Culver City-based Fortune Casuals LLC, and Los Angeles-based Chip & Pepper.
Trading Shoes
By going public in a reverse merger, Fashion House Holdings Inc. is looking to acquire new brands.
In the reverse merger, Los Angeles-based Fashion House acquired a controlling stake in a shell company called TDI Holding Corp., listed on the Over-the-Counter Bulletin Board. TDI then changed its name to Fashion House.
A reverse merger is a faster and less costly way of taking a company public than an initial public offering. Local denim companies Blue Holdings Inc. and True Religion Apparel Inc. have also gone public in this manner.
Fashion House sells women’s footwear for $79 to $350 to Nordstrom, Macy’s and Neiman Marcus under the labels of designers Oscar de la Renta and Richard Tyler Couture. The company generated $5.1 million in revenues for the year ended Dec. 31, 2004.
“The company is at a point where it would like to go further with acquisitions of designer brands. The fact that it is a public company gives a platform to go forward,” said Ron Wittman, Fashion House’s chief financial officer.
Fashion House has not released guidance for upcoming quarters. Shares of Fashion House fell 20.86 percent to close at $1.10 on Sept. 6, the company’s first day of trading.
*Staff reporter Rachel Brown can be reached by phone at (323) 549-5225, ext. 224, or by e-mail at
[email protected]
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